What Is the Best Professional Background for a Hedge Fund Job?

Many aspiring to a career in the hedge fund industry ask this question in the broader context of career path. It is an excellent question but, like so many others, has no single answer. The truth is there are many paths to a career in hedge funds.

Hedge fund employees come from a multiplicity of backgrounds, some of which seem logical and others which do not. Some examples of professional backgrounds that one might not immediately associate with hedge funds include public accountants, information technology professionals and attorneys, yet 13 percent of those working in hedge funds come from one of these three professional backgrounds, based on a recent survey performed by Job Search Digest.

Almost the same percentage of hedge fund employees enter the profession directly from institutions of higher learning but, only a small percentage of those students graduated with an MBA. This is good news for those who had dreamed of landing a position with a hedge fund right out of school but were unsuccessful.

The greatest percentage of hedge fund professionals come to the job with a background in asset management, followed by individuals with sell-side experience and then by those with an investment banking background. Yet these backgrounds are only shared by one-third of hedge fund professionals.

The rest have backgrounds in proprietary trading, were brokers-dealers, worked in private equity, fund administration, mutual funds, research and other varied professions.

What’s the Takeaway?

First and foremost, the takeaway should be that there are numerous roads to a career in hedge funds. An MBA isn’t required nor must one work in an investment bank to effect the transition to a hedge fund career. Re-think all the clichéd advice and wake up to the possibility that you may already have the “right” background for a hedge fund job.

For example, a background in information technology is a highly marketable skill in the hedge fund industry. Cyber security concerns, automated trading, web development and other technological aspects of modern hedge fund operations require these talents.

Landing the Interview

One’s professional and educational backgrounds are important but you still need to land the interview. There are three principal paths leading to a position with a hedge fund and almost 80 percent of those working in hedge funds today followed one of these three roads. They are: professional networks, personal networks and recruiters and job boards.

Negotiating Your Compensation

A successful interview is going to lead to a job offer which, in turn, leads to compensation negotiations. Compensation packages in hedge fund firms can be very complex and any candidate for employment needs to engage in thoughtful and thorough research to ensure fair compensation for the corresponding contribution to the firm.

There are a great many variables to consider, including the size of the firm, the strategy the firm is pursuing, the bonus structure, upside sharing conventions, expected working hours and vacation, to name a few.

Over the coming months, we will continue to share pertinent job related information as well as point you to tools that you can leverage – whether you already have a job in the hedge fund industry or are interested in moving into that space.